Analysts say Sun might cut up to 8000 jobs

Sun Microsystems might lay off up to 8000 people later this week after it reports earnings, analysts at Merrill Lynch & Co and Sanford C Bernstein & Co report.

          Sun Microsystems might lay off up to 8000 people later this week after it reports earnings, analysts at Merrill Lynch & Co and Sanford C Bernstein & Co report.

          Both the Merrill Lynch report, released yesterday, and the Bernstein report, released on Monday (US time), say there are signs that a reduction of the Sun workforce, now at 39,400, is likely to come after earnings are reported on Thursday. A reduction of 8000 people would equal 20% of the company's current total workforce.

          Sun had no comment on the reports, says spokeswoman Diane Carlini, who adds the reports were "speculation driven by investors." The company currently is in a quiet period ahead of its earnings report, Carlini says.

          The Merrill Lynch report, written by analyst Steven Milunovich notes that company managers have said cuts would be considered after getting a better look at demand during the second half of the fiscal year.

          Sun's dependence on proprietary technology, notably its Sparc processors and Solaris operating system, "is looking increasingly retro," Milunovich writes. Sun's endorsement of Linux is critical to its prospering, but given its installed base of Solaris, the endorsement has been tepid, Milunovich says, adding that while it's "premature to write off" Sun, the intermediate term looks tough.

          The Bernstein report says Sun has waited too long to reduce its workforce. Sun's revenue is down about 45% from its peak, while the company's head count is down only 10% from its peak, the report says.

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